Pensions are not the only fruit - reaping the rewards of holistic later life advice

Stuart Wilson

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27th October 2017

"Let’s not beat about the bush here – we all know the opportunity that exists with later life clients and that they have a far greater propensity to seek out, and pay for, advice."

Last month we submitted a formal written response to the Parliamentary Work & Pensions Committee regarding its inquiry into the introduction of Pension Freedoms, whether they were working as planned, and in areas such as the PensionWise guidance service, whether this was doing the job it was set up to do.

Now, as predominantly mortgage advisers reading this, you might think this is ‘not your bag’ or not your area of expertise, however part of the reason for our response was around the need for joined-up thinking when it comes to clients either planning for retirement, coming up to retirement, or actually in retirement. At present, we believe that the tendency to have client’s retirement needs placed into silos, such as pensions/mortgages/legal/care/protection/health – and to have those needs catered for by separate advisers – means that a fully-rounded, holistic advice experience is not delivered and, increasingly, only the preserve of those who have the money to pay for their advice.

Before we start, I think it’s important to stress our support for the PensionWise service and that we believe the introduction of Pension Freedoms and Choice was absolutely the right policy at the right time. We wouldn’t dispute that, and given the ‘pension gap’ these type of arrangements were designed to confront, then we would certainly say it was completely necessary and, no doubt, has helped a number of people to work out what they have/don’t have, how they might access their pensions and how they might work with them for the duration of their retirement.

However, as is widely understood, the income needs of the newly-retired are not just focused around the pension, and the money this can deliver. Increasingly, the notion of a traditional retirement has been turned on its head – certainly in terms of the pension that might be secured at the end of a working life, plus of course traditional thinking on when retirement should be taken are also being consigned to the history books as many people either decide to work into ‘retirement’ or feel they have no other choice but to.

What we also wanted to do with our response to the Work & Pensions Committee was to outline the fact that ‘pensions are not the only fruit’ when it comes to retirement, and that advisers would need to look beyond pension wealth, especially when it comes to utilising housing wealth – an increasingly important area to be considered and understood, especially for those who are both looking at small pension pots and are not necessarily the demographic who would be taking up advice.

This is why we support pension guidance, but we also believe it should not stop there, and (at the very least) it has to signpost other income options and other assets the individual might be able to access, such as the home. Take this recent research from Retirement Advantage which suggested that over-55s in the UK could now access a cumulative £375bn in housing equity – this rose by £2bn just in the third quarter of this year (a 2.7% increase), and in some areas of the country the increase was nearly double this, with the East Midlands up 5.1%, the South West up 4.8% and the West Midlands up 4.6%. Only in London did we see the figure dip slightly by 0.6% as house prices in the Capital began to fall back.

The point is that older homeowners around the country, either with a mortgage or not, are still likely to have significant levels of equity in their homes, and yet a sole focus on pensions is not going to even look at the wealth available here and how it might be accessed. Whether that is through downsizing properties or using equity release, at the very least we need a Guidance service that looks beyond the pension and highlights the potential options in these other areas, before (one would hope) pointing them in the right direction for the professional advice required.

And this is the other major point that we highlighted to the Committee – it is about both the availability and provision of advice which can cover off all these areas, not just the sector silos we discussed earlier. At the moment, the number of advisers who are able to provide this holistic advice service is relatively small, and there does need to be an industry-wide push from the profession to secure the necessary qualifications required in these other areas, or (at the very least) to develop sound relationships with other specialists in order that the client has one point of entry, via their adviser, but by doing so they are still able to access advice across all these other areas.

Part of the reason why we set up the Later Life Academy was to allow advisers who might be specialists in one specific area to gain knowledge, insight, experience, and support across many others needed by later life clients. We acknowledge that forging into new sectors might seem daunting however it was (and is) our belief that once you make that first step – with the help of the Academy – the transferable skills would come to the fore, and closing the knowledge gap and making use of our services, would allow you to provide in those other areas.

Let’s not beat about the bush here – we all know the opportunity that exists with later life clients and that they have a far greater propensity to seek out, and pay for, advice. The demographics of the UK are not going to change anytime soon, and neither are their requirements especially as we see ongoing trends in terms of pension provision, care provision, funding offspring, and the like. The point is that these needs have to be dealt with ‘in the round’ not in splendid isolation – those advisers who can grasp this opportunity now are going to reap some significant rewards in the years to come.

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